Final answer:
Purchasing a small portion of a public company as an investment means buying stock, which offers potential returns through dividends and capital gains.
Step-by-step explanation:
When you purchase a small portion of a public company as an investment, you are buying stock. Stock represents firm ownership, and a company's stock is divided into shares. When a company sells stock to the public for the first time, it's known as the initial public offering (IPO).
Purchasing stock provides the buyer with a potential rate of return in two forms: dividends and capital gains. This is different from a Certificate of Deposit (CD), which is a type of investment where you loan money to a bank and earn interest over a fixed term with an agreed maturity date. A CD typically offers a lower rate of return compared to stocks and has a penalty for early withdrawal.